The efficacy of cheap talk in collective action problems

Abstract

Incomplete information exacerbates the problems inherent in collective action. Participants cannot efficiently coordinate their actions if they do not know each other’s preferences. I investigate when ordinary communication, or cheap talk, may resolve mutual uncertainty in collective action problems. I find that the efficacy of communication depends critically on the relationship between contributions and the value of the joint project. The incentive barriers to honesty are highest when every contribution increases the project’s value. Participants then have a strict incentive to say whatever would induce others to contribute the most, so cheap talk lacks credibility. By contrast, when contributions may be marginally worthless, such as when the project has no value unless contributions hit a certain threshold, communication may help participants avoid wasted effort. Using these findings, I identify which collective action problems in politics might benefit from communication and which require more expensive solutions to overcome uncertainty.